States and cities of usa for Assuming that the method of production remains unchanged, what happens to prices and profits when the net national product has to be divided between laborers and capitalists? He proceeds to give the wage successive values ranging from 1 to 0. When wage (w) is equal to 1 the whole national income goes to wages and profits (r) are eliminated. At this level of wages the relative values of commodities are in proportion to their labor cost, that is to say to the quantity of labor which directly and indirectly has gone to produce them, explains Sraffa. Conversely, when w is equal to 0, all of the national income goes to the capitalists. However, it is important to note how profits and prices behave in the intermediate range. Prices diverge from their labor contents in the intermediate range, and Sraffa’s explanation of this phenomenon is the same as that of Ricardo and Karl MARX. He writes that the key to the movement of relative prices consequent upon a change in wages lies in the inequality of the proportions in which labor and means of production are employed in the various industries. States and cities of usa 2016.